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Ruling

Subject: self education expenses

Question

Are you entitled to a deduction for self education expenses?

Answer

No.

This ruling applies for the following periods:

Year ended 30 June 2010

Year ended 30 June 2011

Year ended 30 June 2012

Year ended 30 June 2013

Year ended 30 June 2014

Year ended 30 June 2015

The scheme commences on:

1 January 2010

Relevant facts and circumstances

You have achieved a Certificate 3 in Aged Care.

You are undertaking a Diploma of Nursing.

You are employed as a Personal Care Attendant (PCA), medication endorsed.

You undertake standard caring duties and also dispense medication.

You do not require sign off by a Registered Nurse (RN) to give out medication.

You will not become registered upon completing your diploma.

You expect that upon completion of your diploma you will move up a grade to an Enrolled Nurse (EN), but you are unsure if it will result in a pay rise.

You pay the fees associated with your course in full.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1.

Reasons for decision

Summary

It is considered that your self education will open up a new field of employment, that of an EN. Therefore, you are not entitled to a deduction for self education expenses. 

Detailed reasoning

Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for a loss or outgoing to the extent that it is incurred in gaining or producing assessable income. However, a loss or outgoing is not deductible if it is of a capital, private or domestic nature, or it is incurred in gaining or producing exempt income.

The Commissioner's view on the deductibility of self education expenses are explained in Taxation Ruling TR 98/9. According to paragraph 13 and 14 self education expenses are allowed if:

· a taxpayer's income earning activities are based on the exercise of a skill or some specific knowledge, and the self education course enables the taxpayer to maintain or improve that skill or knowledge; or,

· the study of a subject of self education objectively leads to, or is likely to lead to, an increase in a taxpayer's income from their current income earning activity in the future.

Therefore, provided there is a sufficient connection between your self education and current income earning activities, you are entitled to claim a deduction for your self education expenses.

However according to paragraph 15 of TR 98/9, no deduction is allowed for your self education expenses if the study is to:

· enable you to get employment

· enable you to obtain new employment, or

· open up a new income-earning activity (whether in business or in your current employment).

This view is supported by the decision of the High Court in FC of T v. Maddalena 71 ATC 4161; (1971) 2 ATR 541, which establishes the principle that no deduction is allowable for self education expenses if the study, viewed objectively, is designed to enable a taxpayer to get employment or obtain new employment. Such expenses are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income.

Based on the Australian Standard Classification of Occupations (ASCO) descriptions, there is a significant difference between the position of EN and RN, on the one hand, and PCA and Nursing Assistants (NA) on the other hand. In addition to the requirement of registration or licensing, the EN and RN have entrusted to them a range of activities that could not be undertaken by the PCA/NA. At its simplest level, the EN and the RN are nurses; the NA, or PCA, is not.

A person does not need to have a degree in Nursing, or to be studying for such a degree, to be employed as a PCA or NA.

Although, a PCA and a RN would primarily perform different duties, we do recognise that some duties may overlap on occasions. However, as discussed above, a RN would perform duties of a more specialised nature based on the additional education and training they have received.

Your situation can be distinguished from example 3, Kenny, in the Nurses, midwives and direct carers - claiming self education expenses fact sheet as you held your medication endorsement prior to undertaking the Diploma of Nursing.

It is considered that your self education will open up a new field of employment, that of an EN. Therefore, you are not entitled to a deduction for self education expenses.